RNS Number : 9399G
Induction Healthcare Group PLC
29 July 2019
29 July 2019
Induction Healthcare Group PLC
("Induction", the "Company, or the "Group")
Audited results for the year and 26 days ("Period") ended 31 March 2019
Induction Healthcare Group PLC, a leading healthcare technology company helping to streamline the delivery of care, announces its maiden results for the Period ended 31 March 2019.
The Group's proprietary mobile app, Induction Switch, provides healthcare professionals with the tools for getting quick access to essential hospital information, such as guidelines and telephone extension numbers, as well as enabling direct and time-saving communication, all in a secure and regulatory compliant setting.
Highlights
· Successful IPO on AIM in May 2019
- £16.6m gross proceeds to fund working capital and acquisitions
· Continued strong growth in registered user base
- 38% increase in the six months to 31 March 2019
· Established, engaged user base using the Induction Switch app
- 45% of NHS hospital doctors, 14% of NHS healthcare professionals*
* NHS Workforce Statistics - March 2019
Current trading and outlook
· Development of new Induction Switch features progressing well
· Continued growth in users and engagement from period end to 25 July 2019
- Registered user base up 18% to 94,020
- Growth in lookups (directory / guidelines), calls and document downloads
- Private workspaces up 21% to 210
- Number of Level 1 users in private workspaces up 42% to 2,022
· Strong acquisition pipeline targeting new and complementary products, users and geographies
Ibs Mahmood, CEO at Induction, said:
"2019 has been an important year for Induction. Our IPO raised £16.6m to accelerate our growth strategy, both organically and via acquisitions. We are pleased with the continued growth in the user base and user engagement with our app, Induction Switch, which is helping healthcare professionals to deliver patient care more effectively.
We are excited about the future and remain confident that we have the right strategy in place to create value for all our stakeholders and healthcare professionals."
ENQUIRIES
Induction Healthcare
Ibs Seb Jantet, Chief Financial Officer Mahmood, Chief Executive Officer
Via FTI Consulting
Via FTI Consulting
Numis Securities (Nominated Adviser and Broker)
James Black / Freddie Barnfield / Huw Jeremy / Matthew Jones
+44 (0) 207 260 1000
FTI Consulting
Brett Pollard / Jamie Ricketts / Elena Kalinskaya / Sam Purewal
+44 (0) 203 727 1000
About Induction
Induction Healthcare Group PLC is a leading healthcare technology company focused on helping healthcare professionals to streamline the delivery of care. The Group's technology enables healthcare professionals to save time and deliver care more effectively and to identify ways to allocate resources more efficiently.
The Group is initially targeting improving the way healthcare professionals communicate with each other through its Induction Switch app that provides a telephone directory (allowing healthcare professionals to easily find extension telephone numbers), messaging and an administration portal (to share and view hospital guidelines), all in a secure and regulatory compliant setting.
As at 25 July 2019, the Induction Switch app had over 94,020 registered users, primarily in the UK. The registered user base grew by 18% from 31 March 2019 to 25 July 2019.
CEO Review
Introduction
2018 was a landmark year for Induction as we embarked on our journey to help healthcare professionals streamline the delivery of care. The Group's technology enables healthcare professionals to save time and deliver care more effectively and healthcare institutions to identify ways to allocate resources more efficiently. The Group is initially targeting improving the way healthcare professionals communicate with each other, through its mobile application (''App''), Induction Switch. Induction Switch is an App that provides a telephone directory (allowing healthcare professionals to easily find extension numbers), messaging and an administration portal (to share and view hospital guidelines), all in a secure and regulatory compliant setting.
Business review
Key Performance Indicators as at 31 March 2019:
· 79,649 registered users, an increase of 38% over the last six months;
· 40,765 average monthly users in the month of March 2019;
· users looked up 6.3m numbers in the directory, made 1.3m calls using Induction Switch and looked up 40,654 guidelines during the last 12 months
· 45% of NHS hospital doctors and 14% of all NHS healthcare professionals use Induction Switch;
· 584 UK healthcare institutions and 140 overseas healthcare institutions using Induction Switch; and
· 174 private workspaces set up with 1,423 "Level 1" users.
During the Period the Company was focusing on growing its user base, building out the Induction Switch functionality and securing the funds post-Period-end via an IPO to begin to deliver on the Group's strategy.
Growing the user base
As at 31 March 2019 Induction Switch had 79,649 registered users, primarily in the UK, including 52,338 doctors, General Practitioners and consultants, 15,611 nurses and 11,700 other healthcare professionals. The user base has been growing rapidly largely through word of mouth between healthcare professionals.
From a geographic perspective, as at 31 March 2019, 74,733 (94%) of the Group's registered users were based in the UK, 1,723 (2%) in the US, 1,557 (2%) in South Africa, 832 (1%) in Malta, 677 (1%) in Australia and 127 (0.2%) elsewhere. Aside from Australia and the UK, where the Group has a commercial presence, the user base in all of the other geographies has grown through word of mouth, demonstrating the need for a product such as Induction Switch.
As at 31 March 2019, the Group's users were based in 724 healthcare institutions. Within this user base, there were 42 healthcare institutions with more than 500 Induction Switch users, demonstrating both the breadth and depth of current penetration.
The Group launched private workspaces in September 2018 and by 31 March 2019 174 private workspaces had been created. As at 31 March 2019 there were 1,423 users in the private workspaces also known as "Level 1" users, with 857 having joined in the last two months of this financial year as the Group has started to focus on increasing user numbers in Level 1 workspaces ahead of the full commercial launch of messaging. Level 1 access is free to users.
Over the next year, the Group is planning to launch a number of premium features that will only be accessible to users paying a monthly fee. Users subscribing to these premium features are known as ''Level 2'' users.
One of the Group's strengths is that it has an engaged user base and it is focused on making sure that Induction Switch's value proposition remains highly current for all of its users. The Group does this by engaging with users on a regular basis and designing product "blueprints" that helps individual users and groups of users in Level 1 workspaces get the most from Induction Switch. This engagement is demonstrated both by the high average monthly user numbers and by what the Directors believe are industry leading retention rates, with an average of more than 60% of users retained for more than 6 months.
Building out Induction Switch's functionality
During the Period to 31 March 2019 the Group made a significant investment in its technology platform, acquiring the intellectual property rights to the MedX secure messaging app. This allowed the Group to bring together the original MedX technology platform developed as part of the proof of concept in Australia with the well-established Induction Switch App in the UK, launching the first generation of the combined application in August 2018. The second generation App incorporating, amongst other features, instant messaging was launched in late March 2019.
The Group also invested in the Company's technology backbone, with a view to creating a scalable and reliable platform capable of servicing the healthcare market. The Groups technology infrastructure has been designed to cater for country specific regulations and data sovereignty.
In addition, the Group has undergone a positive independent audit by Lloyd's Register Quality Assurance for the purpose of certification in ISO9001:2015 and ISO27001:2013 to cover the required activities in the provision of software products in a secure manner. This initial audit took place in January 2019 and the Group's certification to both standards was approved in March 2019.
Successful IPO for future growth
In April 2019, the shareholders in the Company executed a share for share exchange whereby Induction Healthcare Group PLC acquired 100% of the share capital of the Company and in May 2019 Induction Healthcare Group PLC successfully completed its Initial Public Offering (the "IPO") on the Alternative Investment Market ("AIM") of the London Stock Exchange. This, together with a private placing completed just ahead of the IPO, raised gross proceeds of £16.6m. These funds will be used for working capital and to fund the cash consideration of acquisitions.
The Company would like to thank its shareholders, employees and advisors for their support. The IPO was achieved against a backdrop of challenging market conditions and continued uncertainty with regard to the United Kingdom's exit from the European Union.
Growth strategy
The Group's strategy is to leverage its 79,649 (as at 31 March 2019) registered and fast growing user base of healthcare professionals as a way to bring technology to healthcare delivery at the grass roots level. The Directors' intention is to grow the Group's number of users, its breadth of technological functionality and its geographic reach through a buy and build strategy.
Current trading and outlook
Trading since the Period end has been positive. Registered users have increased from 79,649 to 94,020 as at 25 July 2019, growth of just over 18% since the Period end. Moreover, the number of private workspaces and "Level 1" users in those workspaces have increased by 21% and 42% respectively, to 210 and 2,022, with the Group continuing to focus on building an engaged user base.
Induction Switch messaging functionality was launched in March 2019 and is currently being trialled in a handful of workspaces. The initial user reaction has been positive, and the plan remains to roll it out to a broader user base during the current financial year.
The Group continues to make progress expanding Induction Switch functionality and whilst it has taken slightly longer than expected to resolve some of the technical teething issues, premium features are still planned to be launched during the current financial year. The freemium business model has been well received by healthcare professionals and the initial signs are encouraging, both in terms of the value proposition and the Group's ability to access funding pools as it seeks to upgrade users to "Level 2".
The Group has an active pipeline of acquisition targets, in line with its strategy to pursue acquisitions that add new and complementary products, users and geographies.
Ibs Mahmood
CEO
29 July 2019
Financial review
Trading review
The loss for the Period was £2.7m. This included £0.5m of non-recurring costs relating to establishing the Group, acquiring Podmedics and preparatory work for the IPO on AIM. The Group made significant investment in its technology platform during the Period, with £1.3m spent on product development (excluding £0.2m of capitalised development spend).
Net debt
As at 31 March 2019 the Group had £2.5m of loan notes outstanding. Subsequent to the Period end, £2.0m of these loan notes were converted into Ordinary Shares in Induction Healthcare Group PLC and the balance was repaid.
Intangibles assets
As at the Period end the total intangible assets were £0.2m. The majority of this related to capitalised development spend relating to Induction Switch.
Working capital
Current assets mainly comprise the Podmedics option, VAT, prepayments and other receivables. Current liabilities mainly comprise trade payables and accruals with accrued IPO fees accounting for a significant portion of the accruals.
Seb Jantet
CFO
29 July 2019
Consolidated Income Statement
for period 5 March 2018 (date of incorporation) to 31 March 2019
Note
2019
£000
Revenue
1,2
-
Cost of sales
1
(66)
_______
Gross loss
(66)
Distribution expenses
(264)
Development expenses
(1,300)
Administrative expenses
(1,066)
Other operating expenses
(11)
_______
Operating loss
3
(2,707)
Financial income
5
-
_______
Loss before tax
(2,707)
Taxation
6
-
_______
Loss for the Period
(2,707)
_______
Attributable to:
Equity holders of the parent
(2,707)
_______
(2,707)
_______
The notes form an integral part of these Financial Statements
Consolidated Statement of Comprehensive Income
for period 5 March 2018 (date of incorporation) to 31 March 2019
Note
2019
£000
Loss for the Period
(2,707)
Other comprehensive income
Items that will be reclassified to profit or loss
Foreign currency translation differences - foreign operations
(1)
_______
Other comprehensive loss for the Period
(1)
_______
Total comprehensive loss for the Period
(2,708)
_______
Attributable to:
Equity holders of the parent
(2,708)
_______
(2,708)
_______
Pence
Earnings per share:
Basic loss per share
7
(6,128.79)
Diluted loss per share
7
(6,128.79)
The notes form an integral part of these Financial Statements
Consolidated Balance Sheet
at 31 March 2019
Note
2019
£000
Non-current assets
Intangible assets
8
222
_______
222
_______
Current assets
Other financial assets
10
100
Other receivables
11
128
Cash and cash equivalents
12
169
_______
397
_______
Total assets
619
_______
Current liabilities
Trade and other payables
14
761
Loans and borrowings
13
2,500
_______
3,261
_______
Total liabilities
3,261
_______
Net liabilities
(2,642)
_______
Equity attributable to equity holders of the parent
Share capital
16
66
Translation reserve
16
(1)
Accumulated deficit
(2,707)
_______
Total equity
(2,642)
_______
The notes form an integral part of these Financial Statements
These financial statements were approved by the board of Directors on 29 July 2019 and were signed on its behalf by:
Sebastien Jantet
Director
Company registered number: 11232772
Consolidated Statement of Changes in Equity
for period 5 March 2018 (date of incorporation) to 31 March 2019
Note
Share
capital
Translation reserve
Accumulated
deficit
Total equity
£000
£000
£000
£000
Balance at 5 March 2018 (date of incorporation)
-
-
-
-
Total comprehensive loss for the Period
Loss for the Period
-
-
(2,707)
(2,707)
Other comprehensive loss for the Period
-
(1)
-
(1)
_______
_______
_______
_______
Total comprehensive loss for the Period
-
(1)
(2,707)
(2,708)
_______
_______
_______
_______
Transactions with owners, recorded directly in equity
Issue of shares
16
66
-
-
66
_______
_______
_______
_______
Total contributions by and distributions to owners
66
-
-
66
_______
_______
_______
_______
Balance at 31 March 2019
66
(1)
(2,707)
(2,642)
_______
_______
_______
_______
The notes form an integral part of these Financial Statements
Consolidated Cash Flow Statement
for period 5 March 2018 (date of incorporation) to 31 March 2019
Note
2019
£000
Cash flows from operating activities
Loss for the Period
(2,707)
Adjustments for:
Depreciation, amortisation and impairment
11
Financial income
-
_______
11
Increase in trade and other receivables
(228)
Increase in trade and other payables
761
_______
Net cash used in operating activities
(2,163)
_______
Cash flows from investing activities
Expenditure on internally generated intangibles
8
(197)
_______
Net cash from investing activities
(197)
_______
Cash flows from financing activities
Proceeds from the issue of share capital
16
30
Proceeds from new loan
13
2,500
_______
Net cash from financing activities
2,530
_______
Net increase in cash and cash equivalents
170
Cash and cash equivalents at 5 March 2018 (date of incorporation)
-
Effect of exchange rate fluctuations on cash held
(1)
_______
Cash and cash equivalents at 31 March 2019
12
169
_______
The notes form an integral part of these Financial Statements
Notes
(forming part of the financial statements)
Induction Healthcare Limited is a private company incorporated, domiciled and registered in England in the UK. Its principal activity is the provision of software to healthcare professionals. The registered number is 11232772 and the registered address is Wework c/o Induction Healthcare, 12 Hammersmith Grove, London, United Kingdom, W6 7AP.
These financial statements include the consolidated financial information of Induction Healthcare Limited (the "Company") and its subsidiaries (together referred to as the "Group"). Details of Induction Healthcare Limited's subsidiaries are included in Note 9. The Group has only one reportable segment.
Both the financial statements of the Group and the financial statements of the company have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs"). Under s408 of the Companies Act 2006 the company is exempt from the requirement to present its own profit and loss account. This is the first period for which financial statements have been prepared.
Judgements made by the Directors, in the application of these accounting policies that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in Note 22.
The financial information included in this preliminary statement has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The information in this preliminary statement has been extracted from the Group's annual report and consolidated financial statements for the Period ended 31 March 2019 and the accounting policies applied, and the judgements, estimates and assumptions made in applying these policies, are consistent with those used in preparing the annual report and consolidated financial statements. This preliminary statement does not constitute statutory consolidated financial statements for the Period ended 31 March 2019 as defined under section 434 of the Companies Act 2006.
The Group's annual report and consolidated financial statements for the period ended 31 March 2019 were approved by the Board of Directors on 29 July 2019. The report of the auditor on those financial statements was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. The annual report and consolidated financial statements for the Period ended 31 March 2019 will be filed with the Registrar in due course.
These financial statements are prepared on the historical cost basis except that other financial assets and liabilities are stated at fair value.
For the Period ended 31 March 2019, the Group made a loss of £2,748,563 and had net current liabilities of £2,684,006. The following matters have been considered by the Directors in determining the appropriateness of the going concern basis of preparation in these financial statements:
(a) On 1 April 2019, the shareholders in Induction Healthcare Limited executed a share for share exchange whereby Induction Healthcare Group PLC acquired 100% of the share capital of Induction Healthcare Limited
(b) On 30 April 2019 and 1 May 2019, Mr Peter Davies and the Induction Healthcare Group PLC entered into a subscription letter and confirmation letter pursuant to which Peter Davies agreed to subscribe for 1,739,130 Ordinary Shares in the capital of the Induction Healthcare Group PLC at a price of £1.15 per share raising £2,000,000;
(c) On 22 May 2019, Numis Securities Placed 12,681,915 shares in Induction Healthcare Group PLC at a price of £1.15 per share with a range of investors raising £14,584,202. These funds were paid into an Induction Healthcare Limited bank account increasing the intercompany balance between Induction Healthcare Limited and Induction Healthcare Group PLC. The intercompany balance is repayable on demand with an interest rate of 0%.
Notes (continued)
1 Accounting policies (continued)
Induction Healthcare Group PLC has provided a letter of support to Induction Healthcare Limited expressing its intentions to continue to provide financial and other support, including not seeking repayment of amounts currently made available through intercompany loans, for at least twelve months from the date of signing these financial statements. As with any company placing reliance on other group entities for financial support, the directors acknowledge that there can be no certainty that this support will continue although, at the date of approval of these financial statements, they have no reason to believe that it will not do so. Further, the directors are of the opinion that no asset is likely to be realised for an amount less than the amount at which it is recorded in these financial statements as at 31 March 2019. Consequently, the Directors are confident that the Group and Company will have sufficient funds to continue to meet their liabilities as they fall due for at least twelve months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration potential voting rights. The acquisition date is the date on which control is transferred to the acquirer. The financial information of subsidiaries is included in these financial statements from the date that control commences until the date that control ceases. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.
Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
Where the Group loses control of a subsidiary, the assets and liabilities are derecognised along with any related non-controlling interest and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the consolidated balance sheet date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the consolidated income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined.
The functional currency of the Company is Sterling. The assets and liabilities of foreign operations with functional currencies other than Sterling, including fair value adjustments arising on consolidation, are translated to the Group's presentational currency, Sterling, at foreign exchange rates ruling at the consolidated balance sheet date. The revenues and expenses of foreign operations are translated at an average rate for the year where this rate approximates to the foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive income and accumulated in the translation reserve.
Notes (continued)
1 Accounting policies (continued)
Exchange differences arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognised directly in equity in the translation reserve.
When a foreign operation is disposed of in its entirety or partially such that control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.
Financial instruments measured at fair value are classified into a fair value hierarchy based on the valuation technique used to determine fair value as follows:
· Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
· Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
· Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions:
(a) they include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Group; and
(b) where the instrument will or may be settled in Induction Healthcare Limited's own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of Induction Healthcare Limited's own equity instruments or is a derivative that will be settled by the company exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of Induction Healthcare Limited's own shares, the amounts presented in the financial statements for called up share capital and share premium account exclude amounts in relation to those shares.
Non-derivative financial instruments comprise other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables. All financial assets and liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value plus, for items measured at amortised cost, transaction costs directly attributable to its acquisition or issue.
Notes (continued)
On initial recognition, a financial asset is classified as measured at amortised cost or fair value through profit or loss ("FVTPL"). The Group has no financial assets measured at fair value through other comprehensive income ("FVOCI"). A financial asset is measured at amortised cost if it is both: held within a business model whose objective is to hold assets to collect contractual cash flows; and its contractual terms give rise to cash flows that are solely payments of principal and interest on the amount outstanding. For the purposes of this assessment, "principal" is defined as the fair value of the financial asset on initial recognition, and "interest" is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding. In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument, including any terms which may affect the timing or amount of contractual cash flows. All financial assets not measured at amortised cost are measured at FVTPL.
Financial assets at FVTPL are subsequently measured at fair value with net gains and losses, including any interest or dividend income, recognised in profit or loss. Financial assets measured at amortised cost are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses.
Interest income, foreign exchange gains and losses, and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. All other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose only of the consolidated cash flow statement.
Other financial assets comprise call options. Options are initially classified as FVTPL and recognised at fair value based on the consideration paid for the option. Subsequently, the options are measured at fair value and the gain or loss on remeasurement to fair value is recognised immediately in profit or loss.
The Group derecognises a financial asset when the contractual rights to receive cash flows from the asset expire, or when it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership are transferred.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
All business combinations are accounted for by applying the acquisition method. Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.
Notes (continued)
1 Accounting policies (continued)
The Group measures goodwill at the acquisition date as:
· the fair value of the consideration transferred; plus
· the recognised amount of any non-controlling interests in the acquiree; plus
· the fair value of the existing equity interest in the acquiree; less
· the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.
On a transaction-by-transaction basis, the Group elects to measure non-controlling interests, which have both present ownership interests and are entitled to a proportionate share of net assets of the acquiree in the event of liquidation, either at its fair value or at its proportionate interest in the recognised amount of the identifiable net assets of the acquiree at the acquisition date. All other non-controlling interests are measured at their fair value at the acquisition date.
Investments in subsidiaries are included in the Company balance sheet at cost less any provision for impairment.
Expenditure on research activities is recognised in the consolidated income statement as an expense as incurred.
Expenditure on development activities is capitalised if the product or process is technically and commercially feasible and the Group intends to and has the technical ability and sufficient resources to complete development, future economic benefits are probable and if the Group can measure reliably the expenditure attributable to the intangible asset during its development. Development activities involve a plan or design for the production of new or substantially improved products or processes. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads and capitalised borrowing costs. Other development expenditure is recognised in the consolidated income statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and less accumulated impairment losses.
Expenditure on internally generated goodwill and brands is recognised in the consolidated income statement as an expense as incurred. Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is charged to the consolidated income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life and goodwill are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:
· patents and trademarks
up to 5 years
· capitalised development costs
up to 5 years
· other intellectual property
up to 5 years
Notes (continued)
1 Accounting policies (continued)
The carrying amounts of the Group's non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. For intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each period end.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit" or "CGU").
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss.
A defined contribution plan is a post-employment benefit plan under which the company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the consolidated income statement in the periods during which services are rendered by employees.
Share-based payment arrangements in which the Group receives goods or services as consideration for its own equity instruments are accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments are obtained by the Group.
Notes (continued)
1 Accounting policies (continued)
The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The fair value of the options granted is measured using an option valuation model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with market and non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
Share-based payment transactions in which the Group receives goods or services by incurring a liability to transfer cash or other assets that is based on the price of the Group's equity instruments are accounted for as cash-settled share-based payments. The fair value of the amount payable to employees is recognised as an expense, with a corresponding increase in liabilities, over the period in which the employees become unconditionally entitled to payment. The liability is remeasured at each balance sheet date and at settlement date. Any changes in the fair value of the liability are recognised as personnel expenses in profit or loss.
A provision is recognised in the consolidated balance sheet when the Group has a present legal or constructive obligation as a result of a past event, that can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability.
Revenue comprises the fair value of consideration received or receivable for access to Induction Switch, the Group's proprietary application which facilitates communication between healthcare professionals, in the ordinary course of the Group's activities. Revenue is shown net of value added tax and trade discounts and is reported as follows:
· On a per-user basis whereby users are charged a monthly fee to access Induction Switch, with the pricing depending on the features selected by users. Invoices are issued monthly and settled via a credit or debit card. Revenue is recognised on a monthly basis reflecting the period during which they have access to Induction Switch.
· On a healthcare institution basis whereby healthcare institutions are charged a subscription for making Induction Switch available to users. This revenue is recognised rateably over the period of the subscription.
Cost of sales consists of the direct costs associated with Induction Switch, the Group's proprietary application, including costs incurred for server hosting and data population.
Payments made under operating leases are recognised in the consolidated income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the consolidated income statement as an integral part of the total lease expense.
Financing expenses comprise interest payable, finance charges on shares classified as liabilities and finance leases recognised in profit or loss using the effective interest method, unwinding of the discount on provisions, and net foreign exchange losses that are recognised in the income statement (see foreign currency accounting policy). Borrowing costs that are directly attributable to the acquisition, construction or production of an asset that takes a substantial time to be prepared for use, are capitalised as part of the cost of that asset. Financial income comprises interest receivable on loans issued by the Group and is recognised in profit or loss as it accrues, using the effective interest method. Foreign currency gains and losses are reported on a net basis.
Notes (continued)
1 Accounting policies (continued)
Tax on the profit or loss for the period comprises current and deferred tax. Tax is recognised in the consolidated income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous periods.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.
The following Adopted IFRSs have been issued but have not been applied by the Group in these financial statements. Their adoption is not expected to have a material effect on the financial statements unless otherwise indicated:
· IFRS 16 Leases (effective date 1 January 2019) - the Group has no leases which would fall within the scope of IFRS 16.
· IFRIC 22 Foreign Currency Transactions and Advance Consideration (effective date to be confirmed).
· IFRIC 23 Uncertainty over Income Tax Treatments (effective date to be confirmed).
· Annual Improvements to IFRS Standards 2014-2016 Cycle (effective date to be confirmed).
· Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions (effective date to be confirmed).
Notes (continued)
Period to 31 March 2019
£000
Rendering of services
-
_______
Total revenues
-
_______
Included in net loss for the Period are the following:
Period to 31 March 2019
£000
Depreciation, amortisation and impairment
10
Audit of these financial statements
50
Research and development expensed as incurred
1,300
_______
Notes (continued)
The average number of persons employed by the Group (including Directors) during the Period, analysed by category, was as follows:
Period to 31 March 2019
No. of employees
Development
5
Sales and Marketing
1
General and Administrative
1
_______
7
_______
The aggregate payroll costs of these persons were as follows:
Period to 31 March 2019
£000
Wages and salaries
610
Social security costs
70
Contributions to defined contribution plans
26
_______
706
_______
The aggregate remuneration of the Directors and the remuneration of the highest paid Director was £129,031.
Period to 31 March 2019
£000
Interest income on unimpaired financial assets
-
_______
Total finance income
-
_______
Financial income includes £43 of interest income received on two loans made to a Director of the group and a senior employee of the group. The terms of the loans are disclosed in Note 20.
Notes (continued)
Recognised in the income statement and equity
Period to 31 March 2019
£000
Current tax expense
Current year
-
Current tax expense
-
Deferred tax expense
Origination and reversal of temporary differences
-
Deferred tax expense
-
Current tax recognised directly in equity
-
Deferred tax recognised directly in equity
-
Total tax recognised directly in equity
-
Tax expense in income statement, total tax expense and tax recognised in equity
-
Reconciliation of effective tax rate
Period to 31 March 2019
£000
Loss for the Period
(2,707)
Tax using the UK corporation tax rate of 19%
514
Non-deductible expenses
(127)
Current Period losses for which no deferred tax asset was recognised
(387)
_______
Total tax expense
-
_______
A deferred tax asset of £387k arises from unused tax losses of £2,580k, however given the early stage nature of the business the deferred tax asset has not been recognised.
The calculation of basic and fully diluted earnings per share has been based on the following loss attributable to ordinary shareholders and weighted-average number of ordinary shares outstanding.
Loss attributable to ordinary shares (basic and diluted)
Period to 31 March 2019
£000
Loss attributable to ordinary shares (basic and diluted)
(2,707)
_______
(2,707)
_______
Weighted average number of ordinary shares (basic and diluted)
Period to 31 March 2019
£000
Issued ordinary shares as at 5 March 2018
20,000
Shares issued on 4 September 2018
9,828
Shares issued on 5 September 2018
35,763
_______
Issued ordinary shares as at 31 March 2019
65,591
_______
Weighted-average number of ordinary shares (basic and diluted)
44,162
_______
Basic loss per share
(6,128.79)
Diluted loss per share
(6,128.79)
Notes (continued)
Acquired intangibles
Development costs
Total
£000
£000
£000
Cost
Balance at 5 March 2018
-
-
-
Acquisitions
36
-
36
Internally developed
-
197
197
_______
_______
_______
Balance at 31 March 2019
36
197
233
_______
_______
_______
Amortisation and impairment
Balance at 5 March 2018
-
-
-
Amortisation for the Period
11
-
11
_______
_______
_______
Balance at 31 March 2019
11
-
11
_______
_______
_______
Net book value
At 5 March 2018
-
-
-
At 31 March 2019
25
197
222
_______
_______
_______
The acquired intangible asset recognised in the books consists of the intellectual property acquired from Hugo Stephenson to Induction Healthcare Limited on 5 of September 2018.
The capitalised development costs consist of the cost incurred on developing the messaging capacity within Induction Switch from 1 January 2019 onwards, the date at which the project passed the technological feasibility milestone.
Amortisation of the acquired intangible asset is recognised over two years in other operating expenses in the consolidated income statement.
No amortisation was recognised with respect to the development costs as the asset has yet to be put into service at the Period end.
Notes (continued)
The Company has the following investments in subsidiaries:
Registered office address
Registered number
Class of
shares held
Balance sheet value
Ownership
Company
2019
Induction Healthcare (UK) Limited
Wework C/O Induction Healthcare, 12 Hammersmith Grove, London, United Kingdom W6 7AP
11237890
Ordinary
£1
100%
Induction Healthcare Pty Ltd
23 Regent Street, Prahran, Victoria 3181, Australia
625119397
Ordinary
£1
100%
2019
£000
Other financial assets designated as fair value through profit or loss
100
_______
100
_______
Other financial assets comprise an option to acquire either the shares or the assets of Podmedics Limited, a company providing a healthcare application used by a substantial number of healthcare professionals in the UK, in exchange for consideration of £400,000 satisfied in either shares or cash. The option agreement was entered into on 5 September 2018 and the Directors consider that there has been no material change to fair value as at the consolidated balance sheet date of 31 March 2019 and, as such, the carrying amount is representative of fair value.
2019
£000
Loans to Director and employees
10
Other receivables
102
Prepayments
16
_______
128
_______
Included within trade and other receivables is £nil expected to be recovered in more than 12 months.
2019
£000
Cash and cash equivalents per consolidated balance sheet
169
_______
Cash and cash equivalents per consolidated cash flow statement
169
_______
Notes (continued)
This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings, which are measured at amortised cost. The loan has not been discounted as the effective interest over the period of the loan would not be material and the loan was subsequently settled on 4 June 2019. For more information about the Group's exposure to interest rate and foreign currency risk, see Note 17.
2019
£000
Current liabilities
Loan from Director
2,500
_______
2,500
_______
Currency
Nominal interest rate
Year of maturity
Face value
Carrying amount
2019
2019
£000
£000
Loan from Director
£
0%
2019
2,500
2,500
_______
_______
2,500
2,500
_______
_______
The Director loan is repayable in the event of an initial public offering or a financing which raises not less than £20m in equity or a sale of a controlling interest or substantially the whole of the assets to a third party purchaser. See subsequent event Note 21 for more details.
Changes in loans and borrowings from financing activities
Total
£000
Balance at 5 March 2018
-
_______
Changes from financing cash flows
Proceeds from loans and borrowings
2,500
_______
Total changes from financing cash flows
2,500
_______
Other changes
Interest expense
-
Interest paid
-
_______
Total other changes
-
_______
Balance at 31 March 2019
2,500
_______
Notes (continued)
2019
£000
Trade payables
107
Non-trade payables and accrued expenses
654
_______
761
_______
Included within trade and other payables is £nil expected to be settled in more than 12 months.
The Group operates a defined contribution pension plan which was put in place in October 2018. The total expense relating to this plan in the current year was £24,066.
Share capital
Ordinary shares in thousands of shares
2019
No. of shares (000)
On issue at 5 March 2018 (date of incorporation)
-
Issued for cash
30
Issued in exchange for intangible asset (see Note 8)
36
_______
On issue at 31 March 2019 - fully paid
66
_______
2019
£000
Allotted, called up and fully paid
Ordinary shares of £1 each
66
_______
66
_______
Shares classified as liabilities
-
Shares classified in equity
66
_______
66
_______
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of Induction Healthcare Limited.
During the Period Induction Healthcare Limited issued 65,591 £1 ordinary shares for a consideration of £65,591, of which £29,828 was settled in cash and £35,763 was settled by way of an assignment of intellectual property (see Note 20).
Notes (continued)
The translation reserve comprises all foreign exchange differences arising since 5 March 2018 (date of incorporation) from the translation of the financial information of foreign operations.
No dividends were recognised during the Period.
The following table shows the carrying amounts and fair values of financial instruments as at 31 March 2019. For financial assets and liabilities not measured at fair value, the carrying amount is considered to be a reasonable approximation of fair value.
Financial assets
2019
£000
Financial assets measured at FVTPL
Other financial assets
100
_______
100
_______
Financial assets measured at amortised cost
Loans to Director and employees
10
Other receivables
102
Cash and cash equivalents
169
_______
281
_______
The business does not hold any other form of financial assets. No assets require impairment.
Financial liabilities
2019
£000
Financial liabilities measured at amortised cost
Trade and other payables
107
Loans and borrowings
2,500
_______
2,607
_______
The business does not hold any other form of financial liabilities.
Notes (continued)
17. Financial instruments (continued)
Risk management (continued)
All financial instruments measured at fair value are considered to be Level 3 financial instruments in the fair value hierarchy. Other financial assets comprise the cost of an option to acquire either the shares or the assets of Podmedics Limited in exchange for consideration of £400,000 satisfied in either shares or cash. Whilst no formal valuation process was undertaken, the option was recognised initially at cost, which represented the market value at the time that the option was acquired. Given as at 31 March 2019 no formal decision has been made with regard to whether to exercise the option and that there has been no material change in the trading of Podmedics between the time of the acquisition of the option and the Period end, the Directors have concluded that there has been no material change in the fair value of the option. There are no significant unobservable inputs used in the valuation of the option.
The Group has exposure to the following principal financial risks in the operation and management of its
business:
(i) Liquidity risk;
(ii) Credit risk; and
(iii) Financial risk.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's treasury policies are designed to ensure that sufficient cash is available to support current and future business requirements. Cash management is a core feature of the Group's business model and rolling cash flow forecasts, updated on at least a monthly basis, are reviewed to manage these requirements. At 31 March 2019, the contractual maturity of all financial liabilities other than loans and borrowings was less than 2 months. The Director loan is repayable in the event of an Initial Public Offering or a financing which raises not less than £20m in equity or a sale of a controlling interest or substantially the whole of the assets to a third party purchaser. See Subsequent Events Note 21 for more details. Contractual cash flows are equal to the carrying amounts of financial liabilities.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group's receivables from customers and investment securities. The Group's principal financial assets are cash and cash equivalents, other financial assets, and other receivables, the carrying values of which represent the Group's maximum exposure to credit risk in relation to financial assets, as shown in this note. The Group's credit risk is primarily attributable to its cash and cash equivalents. The credit risk arising from cash and cash equivalents is limited because the counterparties are banks with triple-A credit ratings assigned by international credit-rating agencies.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. Interest rate risk is not considered to be material to the Group.
Notes (continued)
17. Financial instruments (continued)
Risk management (continued)
The Groups main exposure is to the United States dollar and the Australian dollar. However, the Group's exposure is limited as the sums involved are relatively small. The Group has a bank account denominated in Australian dollars and the Group's exposure to foreign exchange risk is limited by ensuring the Group has enough cash in this account to cover approximately six months of expenditure. The Group's exposure to foreign currency risk is as follows. This is based on the carrying amount for monetary financial instruments other financial assets and liabilities based on notional amounts. Sensitivity analysis has not been presented as the effects of reasonably possible strengthening or weakening of the foreign currencies below would not have a material impact on the Group's financial information.
31 March 2019
Sterling
U.S. dollar
Australian dollar
Total
£000
£000
£000
£000
Cash and cash equivalents
167
-
2
169
Other receivables
128
-
-
128
Loans and borrowings
(2,500)
-
-
(2,500)
Trade and other payables
(760)
(-)
(1)
(761)
_______
_______
_______
_______
Balance sheet exposure
(2,965)
(-)
1
(2,964)
_______
_______
_______
_______
Capital management
The Group's policy is to maintain capital sufficient to sustain the future development of the business.
As at 31 March 2019 the Group had no capital commitments.
As at 31 March 2019 the Group had no contingencies.
Notes (continued)
The related parties with which the Group has transacted are Hugo Stephenson, a Director of the Group, Sebastien Jantet, a Director of the Group, Dale Jessop, a member of key management personnel, Ed Wallitt, a member of key management personnel, and Blue Muse Investments Pty Ltd as trustee of The Blue Muse Trust, the ultimate parent entity and a company/trust controlled by immediate relatives of Hugo Stephenson.
Directors of Induction Healthcare Limited and their immediate relatives control 64.51 per cent of the voting shares of Induction Healthcare Limited.
The compensation of key management personnel (including the Directors) is as follows:
2019
£000
Key management remuneration including social security costs
376
376
Key management remuneration comprises short-term employee benefits only.
During the Period ended 31 March 2019, Induction Healthcare Limited entered into a loan agreement with Hugo Stephenson, a Director of Induction Healthcare Limited, under which he agreed to lend the company up to £4,000,000. The loan may be drawn down at any time up to 31 December 2019. The loan is repayable in the event of an Initial Public Offering or a financing which raises not less than £20m in equity or a sale of a controlling interest or substantially the whole of the assets to a third party purchaser. The loan is unsecured and is interest free. As at 31 March 2019, the amount drawn down was £2,499,975.
During the Period ended 31 March 2019, the Group issued 35,736 £1 ordinary shares at par to Blue Muse Investments Pty Ltd as trustee of The Blue Muse Trust, a company/trust controlled by immediate relatives of Hugo Stephenson, in exchange for the assignment of intellectual property by Hugo Stephenson to the Group.
During the Period ended 31 March 2019, the Group entered into an option to acquire the shares or assets of Podmedics Limited, a company owned by Edward Wallitt, a member of the key management personnel. The consideration for the option was £100,000.
During the Period ended 31 March 2019, Induction Healthcare Limited entered into a loan agreement with Sebastien Jantet, a Director of the Group, under which is agreed to lend him £6,552 to fund the purchase of 6,552 £1 ordinary shares in Induction Healthcare Limited. The loan is repayable by 31 December 2019. The loan is unsecured, and interest is due on the outstanding amount at an interest rate equal to the base rate of the Bank of England. As at 31 March 2019, the amount outstanding was £6,581. The loan has not been discounted as the effective interest over the period of the loan would not be material and the loan was subsequently settled on 30 May 2019.
During the Period ended 31 March 2019, Induction Healthcare Limited entered into a loan agreement with Dale Jessop, a member of key management personnel, under which is agreed to lend him £3,276 to fund the purchase of 3,276 £1 ordinary shares in Induction Healthcare Limited. The loan is repayable by 31 December 2019. The loan is unsecured, and interest is due on the outstanding amount at an interest rate equal to the base rate of the Bank of England. As at 31 March 2019, the amount outstanding was £3,290. The loan has not been discounted as the effective interest over the period of the loan would not be material and the loan was subsequently settled on 23 May 2019.
Notes (continued)
On 1 April 2019, the Group went through a reorganisation where the following happened:
· The shareholders in Induction Healthcare Limited executed a share for share exchange whereby Induction Healthcare Group PLC acquired 100% of the share capital of Induction Healthcare Limited in consideration for the issues share in Induction Healthcare Group PLC to the shareholders of Induction Healthcare Limited on the basis of one ordinary share in Induction Healthcare Group PLC for each ordinary share in Induction Healthcare Limited.
· Induction Healthcare Limited issued a loan note to Hugo Stephenson replacing the outstanding £2.5m Directors loan facility as at 1 April 2019. Shortly thereafter Induction Healthcare Group PLC agreed to acquire this loan note from Hugo Stephenson in exchange for the issue by Induction Healthcare Group PLC of a loan note in the same amount (the "Company Loan Note").
On the 30 April 2019 and 1 May 2019, Mr Peter Davies and the Induction Healthcare Group PLC entered into a subscription letter and confirmation letter pursuant to which Peter Davies agreed to subscribe for 1,739,130 Ordinary Shares in the capital of the Induction Healthcare Group PLC at a price of £1.15 per share, raising £2,000,000.
On 7 May 2019, the Induction Healthcare Group PLC carried out a share split such that that each of the existing issued ordinary shares of £1 each in the capital of the Company was sub-divided into 200 ordinary shares of 0.5 pence.
On 7 May 2019 the Induction Healthcare Group PLC and Hugo Stephenson agreed to amend the Company Loan Note Instrument to permit the Induction Healthcare Group PLC and Hugo Stephenson to agree to the conversion of all or part of the loan notes into Ordinary Shares and to provide that the loan notes (to the extent not converted) are repayable by the Induction Healthcare Group PLC within 5 business days of a financing pursuant to which the Group raises not less than £10 million of equity financing. On the same day Hugo Stephenson and the Induction Healthcare Group PLC entered into a subscription letter pursuant to which Hugo Stephenson agreed to subscribe for 1,739,130 Ordinary Shares in the capital of the Induction Healthcare Group PLC at a price of £1.15 per share (the aggregate subscription price therefore being £2,000,000), such subscription price to be satisfied by the conversion of £2,000,000 of the loan notes.
On 7 May 2019, Dr Edward Wallitt, Induction Healthcare Limited and the Podmedics Limited entered into a share purchase agreement pursuant to which Induction Healthcare Limited acquired the entire issued share capital of Podmedics Limited (06840040) from Dr Edward Wallitt. The consideration payable under the share purchase agreement was £400,000 which was satisfied following Admission by the issue by the Company to Dr Edward Wallitt of 347,826 Ordinary Shares in the capital of the Induction Healthcare Group PLC. Pursuant to the share purchase agreement, Dr Edward Wallitt granted customary warranties and a tax deed to Induction Healthcare Limited. The primary reason for the acquisition was to bring under the Group's control all of the assets and intellectual property relating to Induction Switch. The intangibles fair value relating to the acquisition of Podmedics Limited had not been completed at the date that these accounts were approved therefore the remaining disclosures required under IFRS3 Business Combinations has not been presented in these financial statements.
On 22 May 2019, Numis Securities Placed 12,681,915 shares in Induction Healthcare Group PLC at a price of £1.15 per share with a range of investors raising £14,584,202. These funds were paid into an Induction Healthcare Limited bank account increasing the intercompany balance between Induction Healthcare Limited and Induction Healthcare Group PLC. The intercompany balance is repayable on demand.
The preparation of financial information in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. Significant items subject to such assumption and estimate include the useful economic life of assets and the measurement and recognition of provisions. Actual results could differ from these estimates and any subsequent changes are accounted for with an effect on income at the time such updated information becomes available.
The most critical accounting policies in determining the financial condition and results of the Group are
those requiring the greatest degree of subjective or complex judgement. These relate to valuation of acquired intangible assets and other assets which are the areas of judgment that have the most significant effect on the amounts recognised in the financial statements.
Intangible assets
Intangible assets are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount of an asset or a cash-generating unit is determined based on the higher of market value or value-in-use calculations prepared on the basis of management's assumptions and estimates.
Under the terms of a deed of assignment between Induction Healthcare Limited, Hugo Stephenson and JuicyMed Pty Ltd, a company controlled by Hugo Stephenson, Induction Healthcare Limited agreed to issue 35,773 £1 ordinary shares at par to the assignor or a nominee of the assignor (in this case Blue Muse Investments Pty Ltd as trustee of The Blue Muse Trust). No formal valuation was done of the intellectual property at the time of the transaction transferred to the Group. The intangible asset was recognised initially at cost and the Directors expect future economic benefits to flow to Induction Healthcare Limited as a result of the assignment. The Directors have carried out an impairment review and concluded no indicators of impairment exist.
Other assets
Induction Healthcare Limited paid £100,000 for an option to acquire either the shares or the assets of Podmedics Limited in exchange for consideration of £400,000 satisfied in either shares or cash. No formal valuation was done of the option at the time of acquisition. The option was recognised initially at cost and, given as at 31 March 2019 no formal decision has been made with regard to whether to exercise the option and that there has been no material change in Podmedics between the time of the acquisition of the option and the Period end, the Directors have concluded that there has been no material change in the fair value of the option.
